Salon Ownership & Management: Are you prepared?

I’m going to preface this post with a bit of an explanation, because I suspect some backlash may be a possibility. First of all, management is a full-time job. There is far more to running a salon than doing payroll and placing product orders. If you are running your business like a business, you will live by reports and systems for every aspect of your salon. Your work life will be scheduled to the last detail to maximize your efficiency.

I had systems for inventory management, client distribution, employee evaluation, quality assurance, and performance-based compensation. I also organized continuing education, salon contests and competitions, meeting agendas, and portfolio-building opportunities. On top of those tasks, I set sales and retail goals, monitored our marketing efforts, handled social media and website changes, created seasonal services and corresponding promotions, and regularly assessed and adjusted our budget to accommodate fluctuations in performance.

Managers who have worked for corporate chains know exactly what I’m talking about when I say, “Management is a full-time job,” since corporations hire dedicated mangers who run these systems and perform these tasks on a daily basis. Independent salon owners often look at me with a perplexed expression or scoff at me, generally because they have no experience working in actual business management.

I’m not saying that you absolutely can’t have a moderately successful business if you aren’t dedicating yourself to management, but I am saying that without dedicated management your salon will not meet its full potential. Contrary to popular belief (among the uneducated and inexperienced), salons do not “run themselves” and you cannot effectively run your business if you’re working behind a chair full-time unless you have hired someone to manage it for you.

November’s theme is management. I’m not going to talk about managing social media, “turning goals into reality,” or any of that other played out, click-bait garbage. If you want to read a bunch of recycled “Holiday Retail Strategies,” visit any other beauty business blog or e-zine this month. They’re all covering that right now. Tis the season.

This article has been written to get you thinking like an actual business owner.

Too many salon owners struggle because they were not properly educated in business operations or management. Some owners have done well designing their own management techniques and learning as they go, but many haven’t.

A lot of people stepped into the role of salon owner/manager for the wrong reasons. For the most part, they wanted to create a great working environment and a superior client experience. While that’s admirable, a good deal of these entrepreneurs had no idea what a salon owner or manager’s job description entailed. If you’re a current salon owner/manager or you’re reading this because you’re considering ownership or management one day, we’re going to do an exercise right now. Grab a pen and paper.

Answer these questions without cheating. No Googling.

I’ve designed these questions to determine how prepared and educated potential salon owners are. I also use them to discover where my consulting clients are in terms of their own knowledge of business ownership. (If you won’t answer these questions without cheating, don’t even bother filling them out. You aren’t ready for ownership.)

  1. Write down a salon owner’s job description.
  2. Detail the daily life of a salon owner, starting from the time they open their eyes in the morning to the time they shut them at night.
  3. Without looking it up, what is your state’s income tax rate and the current federal employment tax rate?
  4. What does the wage legislation in your area say about payment dates? Which deductions are lawful, if any? Are you required to provide detailed pay stubs, and if so, what information must be provided? When an employee leaves, when must they be given their last paycheck?
  5. What is your jurisdiction’s minimum wage?
  6. What are the state and federal recordkeeping, posting, and filing requirements?
  7. What is the difference between an employee and an independent contractor?
  8. What is the difference between an independent contractor and a self-employed person?
  9. What is the difference between “right-to-work” and “at-will employment?”
  10. What insurance policies are salon owners required to carry?
  11. What are the ventilation and square footage requirements for salons in your city/state?
  12. What are your state board regulations regarding sanitation and other facility requirements?
  13. What does FLSA stand for and what does it mean for you as an employer?
  14. What insurance policies are you required to carry as a salon owner?
  15. Do contracts protect you against every foreseeable circumstance, even if they’re improperly written?
  16. Who takes on the fine if one of your employees is determined to be in violation of your state’s cosmetology regulations?

Believe it or not, I have consulting clients who are current business owners (or have already signed leases on commercial spaces) but have given absolutely no consideration to any of the above questions. They don’t know any of the answers, yet they think it’s possible to just open up shop and start collecting money.

I often see people post questions on Facebook networking groups.

“I want to open a salon. What do I have to do?”

“I’m thinking about buying an existing salon. Does anyone know what’s involved with salon ownership?”

“I’ve signed a lease and construction is almost done but I’m not sure what to do now? How do I set the prices?

My inbox is frequently hit with these general inquiries also.

These questions cannot be answered in an email response or comment box.

I couldn’t condense salon ownership or management into less than 500 pages if I tried (and believe me, I tried hard and my book on salon ownership and management came out to nearly 650). It does not matter if you have been working in this industry for 35 years—if you don’t know how to manage a business you are not ready to even consider salon ownership.

Do you need to go to college and get an MBA? Hell no. (I didn’t.) But you do need to make a significant effort to educate yourself.

  • Utilize resources like SCORE. Most states also have tons of free resources for small business owners.
  • Read books.
  • Attend business workshops.
  • Consult with IRS, DOL, and state employees.
  • Set money aside to retain an employment attorney to help guide you through your setup process.
  • Hire a knowledgeable, reputable consultant with industry experience who actually UNDERSTANDS the laws and can provide you with legitimate state and federal resources to back up their advice.

Owners, these things are your responsibility. Ignorance of the law will not protect you.

The Salon Compensation and Pricing Megakit calculates salon compensation and service pricing for you! It includes:

  • The Salon Compensation and Pricing Calculator, an 8-page spreadsheet system that makes salon compensation and pricing calculation as simple as data entry. The best part? The system is enabled with protections to make it impossible to “break” the formulas!
  • The Salon Compensation and Pricing Guide, a 44-page instruction manual that not only explains how to use the system but also explains every formula so you’re never confused about what the numbers mean or where they came from.
  • A 9-page Employer Obligations Information Sheet to keep you from making very common life-destroying mistakes.
  • Be Worth What You Charge, an 11-page checklist and salon evaluation resource.

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A 55-page PDF with everything you need to understand why certain policies may be required, who should and shouldn’t implement them, and when and how to introduce them in your salon.


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13 Responses

  1. What is a good source for help with policies, procedures, and employee handbook. I have both renters and now employees at a big mess at the moment. I have realized a manager is not the role I want, as I will hire one. I need some guidance….direction. I am at fault for running things in the gray, but I see I need black and white. I sent a detailed role list for both myself as a landlord and for the tenant with your letter for booth renters about being their own boss. In return…Pandemonium….help

      1. Hi Tina,

        I am preparing a business plan for a salon, and despite my best efforts, have been completely unable to locate any industry data on average initial productivity rates across the industry. I realize that productivity is not a measure of success, and that this percentage relies on many factors, but I am struggling to find a way to project how many people will be coming in (and thus how much money will be coming in.)

        I’ve read that the industry target is 80%, but that’s all I’ve found. I expect to be open 12 hours per day with two 6-hour shifts per day of two stylists each (so, a total of 4 stylists working per day.)

        I would be incredibly grateful for the name of any source that could provide this kind of insight. I’ve tried to back into numbers using national data on total revenue, average revenue generated per stylist, etc. but really need something more concrete to firm up my financial projections.

        Thank you!

        1. The reason you’re not finding those numbers is because they don’t (or at least shouldn’t) exist. In my work as a consultant, I get asked this question by every client in one form or another. “How much money can I expect to make?” It cannot be answered. The reason for this is that there are far too many variables at play in the service industry–and even more in the personal services industry–and even MORE in the luxury personal services industry. National numbers certainly won’t be reflective of anything since each area’s demographic vary widely. Even local numbers can’t be trusted since each business is managed differently and the retention abilities of each staff member will affect that salon’s productivity.

          Here are a few of these factors:
          1.) Location traffic. How many people are walking by the location?
          2.) Local economy. How many people in the area can afford to visit the location? (This branches into multiple other factors, such as pricing, perceived value, perceived quality, perceived risk, etc)
          3.) Marketing & web presence. How heavily does the salon advertise? How visible and accessible is the salon’s “brand?”
          4.) Retention. How good is your salon and the staff within it at keeping the business they obtain?
          …seriously, I could make this a list with 20 bullet points, but I’m sure you understand by now just how pointless it would be to even attempt to factor those things.

          I have worked as a salon & spa manager for the duration of my career. Within the same salon, it is extremely common to see one stylist making six figures and another making barely $25,000 a year.

          Do not waste any of your time or effort attempting to predict productivity or traffic or income or sales or–anything. You can’t see the future. Instead, where your plan is concerned, focus on KNOWN numbers. Ignore variables as much as possible. If you’re applying for loans or grants, this refusal to project unknowns will show the lender that you know the industry. Whenever anyone approaches me with their “projections,” I laugh. 99% of the turnaround clients I work with tell me the same thing. “I don’t understand! My financial projections said I’d be making $X but I’m definitely nowhere near that!” It’s because projections are a joke. Redirect your energy into planning based on what you know to be true. The less assumptions made, the better.

          When I work with new startups, we start with known numbers and work backward from there. Some salon owners will start with a location and product lines (superficial stuff) and build their business structure around that. Doing that sets a salon up for failure. Instead, start with known expenses like payroll, product & equipment investment, marketing budget, contingency savings, insurance, licensing, support services (accounting), web design, desired demographic (use your target clientele and expenses to determine base pricing), etc–and THEN look for a location and set a build budget based on what you KNOW you can afford.

          No amount of guesswork will lead to an accurate outcome because salon performance comes down to proper staffing, effective marketing, and dedicated management. Seriously. Don’t project. You’ll set yourself up for failure. A lot of new salon owners make the mistake of overspending, relying on their ridiculously optimistic “projections” to quickly replenish their debt. It happens so often, it should really be stamped on the establishment license applications as a warning.

  2. Hi, im currently running 2 salons. I have been paying my staffs on basic salary, 2 of my seniors are getting commission of total salon’s performance. However I can see my staffs are lacking of motivation thus i’m looking into some hourly paid plus commission scheme. Do you have any recommendations on sources or book i can refer to? I would be much appreciated on that!

  3. Hi Tina, Im almost graduate from cosmetology school, My goal its to open a Beauty Salon I have the capital to do so, but I don’t have any experience, I have the distribuidor contact, the contractor, the equipment contact, and the pos system contact, but that’s all.
    I been a manager on a restaurants in the past for long time but it doesn’t have anything to do with beauty industry.
    Any recommendations?

    1. Spend at least five years working all positions in a salon (or several). You need to know how each position works, what tasks they’re expected to handle, and see first-hand what works and what doesn’t work. Spend time watching others make mistakes and learn from them. I have a LOT of consulting clients who open salons with zero experience. It’s a terrible idea and almost certain to end in failure. Some of my clients hold MBA’s and have extensive corporate management experience (we’re talking high-level managers of entire divisions of major companies), and they still call me a few months in and say, “What the fuck was I thinking?” Lol, so my most critical piece of advice is to take it slow, spend some time observing and learning first-hand, build your skills and get to know the industry and the people in your local area who work in it. There’s a lot more to running a salon than most people initially think.

  4. Hi Tina ! So I have literally read all your very informative posts from top to bottom. I have been in the industry a long time and I have now decided to venture off and purchase an existing salon. It’s in a wealthy area, has 8 stations plus room for 5 more if needed. My issue is with the owner that is selling the business. He’s only selling it for 15k which is LOW for a business he says is “busy”. I get the feeling that he’s taking his clients and employees with him and trying to leave me high and dry. I have come to find out none of the equipment is his, it’s the landlords. He’s using that as his selling point. He seems very desperate to sell, I just think he’s being shady. What should I do?

    1. Listen to your gut here. I have heard of this happening dozens of times. Old owner lists “the business” for sale but refuses to sign contracts specifying what’s included in the sale and won’t sign a non-compete. Bright red flags everywhere. You should never purchase a business without several guarantees in a legally-binding contract. That contract needs to clearly spell out what you’re getting for your money–the client records, the employees, the business itself (as in the actual brand), etc. It also needs to restrict the old owner from competing with you for a period of time (3-5 years is typical, with a proximity radius of 3-5 miles around the salon). Another is a non-solicitation, which keeps the owner from soliciting clients of the business (so they can’t open a shop 5.5 miles away immediately after you purchase and call all the clients in the database).

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